'CBS MarketWatch Weekend': Complete transcript of show

CBS.MarketWatch.com

Following is a complete transcript of last weekend's installment of "CBS MarketWatch Weekend," as recorded by Federal News Service.

CBS MARKETWATCH WEEKEND MAY 13-14, 2000 ------------------ SUSAN MCGINNIS: "CBS MarketWatch Weekend" is presented by Datek Online. The information and technology professionals use to trade is now available to everyone. Datek Online: The rules of online trading are changing. Coming up on "CBS MarketWatch Weekend": Investors take comfort in tame inflation. But how will your portfolio hold up in the week ahead? We take a look at all of the market action. Plus, Richard Branson is taking Virgin Atlantic and the rest of his Virgin empire onto the Internet. We sit down with the entrepreneur, who is always ripe with new ideas. And fast food and fast Internet connections; find out what's new in cybercafes. And we take you to a Burger King
xxfgg
that's offering web connections and video conferencing. It's all straight ahead on "CBS MarketWatch Weekend." (Announcements) MS. MCGINNIS: Hello, and welcome to "CBS MarketWatch Weekend." I'm Susan McGinnis. A sigh of relief permeated Wall Street at the end of last week. Investors cheered at two economic reports signaling tame inflation and a slowing economy. That allayed some investors' fears over Tuesday's big event; that's when Federal Reserve policy-makers meet to chart the course of interest rates. Opinions differ on just how aggressive the Fed might be this time. Let's hand it over to Alexis Christoforous for a closer look at Wall Street and the week ahead. ALEXIS CHRISTOFORUS: Well, Susan, the Fed meeting on interest rates will no doubt take center stage this coming week, but investors will also have some more economic numbers to sift through, including the Consumer Price Index and Housing Starts for April. We'll also see if trading volume finally picks up. Investors have been staying on the sidelines ahead of that Fed meeting, and that has kept investors, both big and small, out of the market. On Friday, the Dow Industrials added 63 points to 10,609 for the week. The Dow eked out a gain of three-tenths of a percent. The S&P 500 rose 13 points, but shed nearly 1 percent for the week. And the Nasdaq
$compq
added a modest 29 points Friday, but for the week, it slumped 7.5 percent. Among the week's standout performers, Dell Computer
dell
rose more than $5 Friday on the heels of its better-than-expected earnings report. And the biotech company MedImmune
MEDI, +2.46%
shot up nearly $10 on word it will be added to the S&P 500 Index
SPX, +0.22%
Ditto for Agilent Technologies
AWI, +0.28%
The Hewlett Packard
hwp
spin-off shot up $14 on word it, too, may be added to the S&P 500 Index. Agilent is also slated to report earnings this Tuesday. That will do it from the NASDAQ. Susan, back to you. MS. MCGINNIS: All right, Alexis, thank you for that. Well, the group of stocks known as the Nasdaq Bulletin Board has a distant cousin overseas. In Hamburg, Germany, a new high-risk exchange just got off the ground. But as Thom Calandra tells us in this week's StockWatch, the timing of that launch may not be ideal for many of the U.S. stocks trading there. ANNOUNCER: Thom Calandra's StockWatch is presented by Datek Online. The rules of online trading are changing. THOM CALANDRA: Europe is hungry for risky Nasdaq bulletin board stocks. The stock market in the city of Hamburg just launched a high-risk market. It's designed for U.S. and Canadian companies that trade as penny stocks on the over-the-counter Nasdaq bulletin board. The Hamburg market is trying to recreate itself out of the ashes of the old economy. The problem for the exchange is timing. When it decided in March to list these over-the-counter and pink sheet stocks, technology and penny stocks were peaking. Many of the 40-or-so tiny stocks on this new exchange have been in "crash mode." Harcourt Companies was selling for $18 when Hamburg listed the Los Angeles firm. It's trying to build a China Internet business. The shares are $6 now. That hasn't deterred Hamburg officials. Kye Hommon, the Hamburg official who launched the high-risk market, says he's doing 150 trades a day. Small European investors can put their arbitrage caps on, taking a cheap position in Europe early in the day, then cashing in when the shares trade over the counter in the United States. The Germans just won't accept any old penny stock; they have scruples. The free float of the shares must be at least 25 percent. This way investors cannot easily manipulate these thinly traded stocks. The companies also must publish regular earnings reports according to SEC standards. The amazing part of all this is that the companies, with names like Tri-National Development
TNAV, -0.37%
NanoPierce Technologies
npct
Interactive Objects
objx
and InsiderStreet.com
nsdr
don't have to agree to be listed in Hamburg; most, however, don't mind. These scrappy companies love the international exposure. From London, I am Thom Calandra, CBS MarketWatch. MS. MCGINNIS: All right. Thanks for that, Thom. Well, many U.S.-based companies are finding that getting listed on Hamburg's high-risk market is a plus, with the market for Internet and multimedia burgeoning there. Hamburg also happens to have the biggest banking establishments in Germany. And a reminder: You can find all of Thom's StockWatch columns on our website at CBS.MarketWatch.com. Still to come on "CBS MarketWatch Weekend," cybercafes are a huge success overseas, but they have been slower to reach mainstream status here in the U.S. And now that's changing. We'll tell you how places offering coffee and computers are picking up steam. And we have a novel idea for a Mother's Day gift. We'll tell you why it may be in her best interest to sell you her house. Stay with us. (Announcements) MS. MCGINNIS: There was once a time when heading to a cafe meant meeting up with some friends for some social interaction. Well, that's still the case, but these days the friends don't have to be there. Steve Gelsi reports on the growth of the cybercafe. STEVE GELSI (CBS MarketWatch correspondent): It's fast food and faster Internet access. That sums up this Burger King, the latest example of mushrooming Internet cafes. Here, behind the french-fryers and soda dispensing machine, is a high-tech Web server that powers these computers. Buy a value meal and get 20 minutes of free Web access, or you can send a video e-mail. (Demonstrates video e-mail.) This is what a video e-mail looks like from Peter Abramson's Burger King in Times Square. He doesn't charge for the service, but he says it's helping him drive business. PETER ABRAMSON (Burger King operator, New York City): By far, e-mail is the most popular use. The video e-mail is something new to most of them because most people do not have a Web cam in their home. So -- but they really clearly like it; beyond that, entertainment, looking for jobs, using it to do research, or just looking to have fun. Tourists read their hometown newspapers while they're here. JENNELL THOMAS (New York resident): This is the very first time I have actually done a video on the Web. It's very easy to do. It's very self-explanatory, so you should be able to get a good feel and make a cool video to send to anybody. MR. GELSI: So you think you might come back? MS. THOMAS: Oh, definitely I'll come back. MR. GELSI: The Burger King features 3Com's Home Connect PC digital camera, which retails for about $150. ANNA PAPPAS (manager, 3Com Product Line Marketing): What we are really trying to do is showcase to the consumer that this is not a scary technology; that video is here, it's today, it's not a future product; and that it's really simple to use, and it can really be used by anybody. MR. GELSI: Another brand-new Internet venue is the cybercafe, which offers a more austere setting for Web surfing. Owner Tom Wise started five years ago with his first cybercafe in SoHo. Business has picked up so much recently that he opened this second one in Times Square. It costs about $12 per hour for Web access. THOMAS WISE (cybercafe owner, New York City): We want to be inviting, relaxing. And we want to create some sort of atmosphere here where people can communicate, whether it's, you know, online or with other people around them, in a way that a traditional cafe would. MR. GELSI: So whether it's at Burger King or the cybercafe, the Internet is reaching into our everyday lives like never before. Steve Gelsi, CBS MarketWatch. MS. MCGINNIS: 3Com
coms
is involved in providing some of the equipment at the two cyber Burger Kings, illustrating one more area of potential growth for these high-tech equipment providers. Still to come on "CBS MarketWatch Weekend," you may know Richard Branson best as the death-defying eccentric entrepreneur who got Virgin Atlantic
virgy
off the ground. Well now, this pioneer is exploring a new area. Betsy Karetnick speaks with Branson. (Announcements) MS. MCGINNIS: Welcome back to "CBS MarketWatch Weekend." It's that time of year when we're all thinking about our mothers and showering them with gifts. Well, this week Marshall Loeb has an idea for an unlikely Mother's Day gift that could be a smart financial move. Marshall? MARSHALL LOEB: Susan, I'm sure you're giving Mom a terrific present for Mother's Day, but here's an extraordinary gift that you might consider for next Mother's Day. If you have aging parents, why not buy them a house or a condo and lease it right back to them? That's a wonderful way for you to help them and at the same time enjoy the juicy tax benefits of being a landlord. You can take big deductions for mortgage interest, maintenance, and depreciation. Better yet, buy your parents' present house and rent it back to them. That way, they get a bundle of cash and you collect regular rent and reap all the deductions. And remember, when they sell their house, your parents get to exclude up to $500,000 of the gain from their taxable income, or $250,000 if only one of them is still living. The IRS insists that you charge your kin a fair market rent. You can easily document that by asking a local real estate broker for a written estimate of what rent the property should command. And of course, both you and your parents have to sign a formal lease and keep careful records of the rental payments. Now you can make much the same buy-and-lease-back arrangement with another generation in your family -- your grown children. This may be a particularly nice deal for newlyweds. And many parents are also managing to make money on their kids' college education by buying a house in the child's college town and renting it to the child, plus a number of his or her classmates. And if you hire your child as the building superintendent, you can even give him or her a rent rebate. Susan? MS. MCGINNIS: Marshall, what if we're talking about a house that needs a lot of work? MR. LOEB: Well, you want to avoid any rattletrap homes that need considerable work, unless you're ready to spend a lot of money to fix it. Also, be sure your child won't be reluctant to collect rent from his or her pals. In effect, your child is standing in for you as the landlord's agent, and it can be demanding to be a landlord. Susan? MS. MCGINNIS: Okay. Thanks for that, Marshall Loeb. And remember, you can find all of Marshall's personal finance columns on our website at cbs.marketwatch.com, also on AOL at keyword "MarketWatch." Well, still to come on "CBS MarketWatch Weekend": He tried to cross the globe in a hot-air balloon. Well, now he's taking on something really exciting. We sit down with Virgin Atlantic CEO Richard Branson next. (Announcements) MS. MCGINNIS: Even if you've never tasted Virgin Cola, bought a CD in a Virgin megastore, or flown Virgin Atlantic, you probably know the brand name, and there's one big reason. Correspondent Betsy Karetnick is here with more. Betsy? BETSY KARETNICK: Susan, Richard Branson's the name. Promotion is his game. At 16 he dropped out of school. At 21 he launched Virgin Records and changed the music industry forever. He later sold Virgin, but Branson's been on the lookout for opportunities ever since. He's founded more than 200 companies to date, promoting many with outlandish stunts. Now he's taking on a whole new challenge: cyberspace. RICHARD BRANSON (founder and CEO, Virgin Atlantic): Our plan, which, you know -- which would be launched on the world in sort of six months or so, is basically on the Internet not just to have an entertainment portal, which we will have and which we -- our backbone, but also to sort out people's every need on one site. So, you know, if you want your gas, electricity, your banking, your mobile phones, your telephony, et cetera, et cetera, you'll be able to go to one site, sort it all out, save yourself about 50 percent of your annual average costs, and just get one envelope a month through the post, instead of hundreds of envelopes. MS. KARETNICK: And how do you hope to make money by being kind of the e-tailer of all goods and services? MR. BRANSON: Because we're going to be offering people all these things, we don't have to have enormous infrastructures for telephones, enormous infrastructures for gas, enormous infrastructures for electricity, et cetera, et cetera. You know, we can put it together into one, and in that way we can save a lot of money and we can save the consumer a lot of money. MS. KARETNICK: Tell me about your entertainment. You said it's going to be the backbone of your online plans. MR. BRANSON: In Britain we have something called Virgin Net, which is really a leisure and entertainment portal. And everything you want to know about films or music or, you know, what's going on in the city that you live, you'll be able to get through Virgin Net. And it's a big plan, but in the countries that we plan to develop Virgin.com, the same will happen there, too. MS. KARETNICK: How many of the online services have you ever used? MR. BRANSON: I prefer businesses, real businesses, in my opinion, like an airline, where you've got real people who are smiling and happy and cheerful and looking after the customer than the screen. But I also know that through the Internet, the consumer can reign as champion. And since Virgin has built itself as a consumer's champion, we've got to be a leader on it. MS. KARETNICK: What happens to the business if something happens to Richard Branson? MR. BRANSON: Well, because I go ballooning and boating and doing stupid things quite often -- MS. KARETNICK: We know. MR. BRANSON: I have to sort of once a year think about, you know, what happens if the balloon goes pop, and so obviously, you know, have made sure that we find good people who run each company. I'm quite a good delegator, so we've got -- you know, we've got people who run these companies on a day-to-day basis without my involvement already. MS. KARETNICK: What do you invest in? MR. BRANSON: Any money I have to spare, I reinvest in new Virgin ventures, basically. So, you know, we're trying to build a global mobile phone company, for instance, and so any spare monies I've got from, say, you know, bringing Singapore Airlines
sinpy
into the airline -- you know, we can reinvest in that and other new ventures. And I'd much rather invest in our own companies than in other people's companies. MS. KARETNICK: And what's your next big adventure that you're going to risk the company's -- (inaudible) -- for? MR. BRANSON: Well, Steve Fossett's been kind enough to invite me in a couple of weeks' time to participate with him in trying to break the transatlantic sailing record, and he's built a wonderful boat called PlayStation, a gigantic catamaran. And we'll have five or six thoroughly uncomfortable, unpleasant days beating our way across the Atlantic. But, you know, sailing is something which is a new pastime for me, and I'm sure I'll learn a lot from him. MS. KARETNICK: Now, without question, Richard Branson wants to become a major retail destination -- that is, both on and off line, but he also claims to be an advocate for the consumer, and people truly believe it. In a brief walk around his New York megastore, people stopped him repeatedly to shake his hand, take pictures and, Susan, believe it or not, give back. MS. MCGINNIS: Wow, pretty impressive. Betsy, you also asked Branson what achievement he values the most. What did he answer? MS. KARETNICK: Well, he answered in two ways, on the personal and professional. First, everybody wants to be a good parent, he says; but of his business accomplishments, the airline gives him the most pride. MS. MCGINNIS: Okay. Thanks for that report, Betsy Karetnick. And still to come on "CBS MarketWatch Weekend," some Bay area dwellers have had it with dot-coms invading their neighborhoods. We'll tell you about this latest controversy when we come back. (Announcements) MS. MCGINNIS: To some, the Internet boom has meant nothing but opportunity, but that's not true everywhere. Cities like San Francisco are being inundated by the push to develop office space. As Victoria Fung reports, finding a balance between booming economic growth and neighborhood preservation is a tough challenge for many high-tech hot spots. VICTORIA FUNG: On the steps of San Francisco City Hall, demonstrators unleash their anger and frustration toward the dot-com businesses descending upon their neighborhoods, neighborhoods with lower-income families, small businesses and ethnic pride. The target of the protest is the Bryant Square Project here in the heart of San Francisco's working-class Mission District. Several rundown structures are to be replaced with two new buildings, primarily for dot-com businesses. Critics argue that gentrification of this modest neighborhood will destroy its diversity and its relative affordability. Umberto Espinosa has run this small auto repair shop for six years. He and five employees are being squeezed out because another new developer with big plans is taking over the building. UMBERTO ESPINOSA (Auto repair shop owner): Everybody who works here, they have a family, child support, have to pay rent, have to send money to our family in Mexico. This is like a nightmare to us. MS. FUNG: As real estate developers cash in on the dot-com boom around San Francisco, we see trendy restaurants sprouting up alongside Mom and Pop stores, and old homes replaced by pricey apartments. JIM RUIZ (Community activist): What we see is new tenants in apartments who used to cost $600, $700 per month now being rented at $1,400, $1,500, $1,600 for a one bedroom, and even for a studio. MS. FUNG: But the latest firestorm of protest is focused on San Francisco's Bryant Square Project. The developer, SKS, plans to create 160,000 square feet of space for commercial offices, nonprofits, retailers and artists. SKS is also pledging nearly $2 million to the city's housing, childcare and transit funds. DAN KINGSLEY (Managing partner, SKS Investments): We felt that that was the right thing to do, that the private sector really has to take a lead here in working with the public sector and the nonprofits to start proactively trying to address some of the issues that are facing cities like San Francisco. MS. FUNG: Some citizens welcome the hundreds of new jobs the project will bring and the sense of progress. MARIE ACOSTA (Ponce citizen): Now I see, with the influx of dot-com industries, that my boys have an opportunity to live and work in their neighborhood, and not only work at a Burger King job, which was all there was that was available, but in the dot-com industry. MS. FUNG: But the digital divide has created an even wider political divide. In San Francisco some leaders are pushing to exempt dot-com businesses from the city's annual cap on office space development. LESLIE KATZ (San Francisco city supervisor): I think if we don't do something, we will see all of the developers looking elsewhere, because there won't be any reason for them to stay in San Francisco. MS. FUNG: But other politicians are fighting for more controlled growth. TOM AMMIANO: I would be very, very careful -- just to try to destroy something or change something on a whim, or because there's a smell of blood and profit out there. MS. FUNG: The dilemma: How to preserve the diverse neighborhoods that give San Francisco its charm, without turning away the kind of explosive economic growth most cities can only dream of. No one's found the answer just yet. In San Francisco, Victoria Fung, CBS MarketWatch. MS. MCGINNIS: San Francisco's development crunch is not about to improve any time soon. By the end of next month, the city is expected to have approved all the new office space it's allowed for all of the year 2000. And make sure to tune in next week. We'll take a look at biometrics, a new technology that could revolutionize the way a person's identity is verified. We'll showcase some of the cutting-edge companies that are developing the technology, and find out how PC makers, banks, government agencies, and others are using it to improve security and cut down on fraud. And that wraps up this edition of "CBS MarketWatch Weekend." I'm Susan McGinnis. Thank you for joining us. Have a great week. And until next time, we'll see you on the World Wide Web.

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